Closing Market Commentary For 08-20-2012
It is difficult to write anything interesting about a market that doesn't have the momentum to move. The same old crap of the HFT's melting the markets up a couple of points on volume so so low that calling it anemic would be inflating the numbers unrealistically. There are two scenarios the market can follow if you don't count the current sideways path we are on. The first one is bullish and I have read some respected authors explaining the 'whys and wherefores' the markets will continue upward and they have a valid point or two.
The second path is bearish and I lean towards that thinking as the financial 'issues' surrounding us are far more numerous and MUCH easier to obtain fruition than any of the positive ones. The downside could be swift and dangerous, but I suspect it will be a mild one, but fastening your seat belt might be the wise thing to do.
On the bullish side I see the market forming a solid base which in normal times (before 2009) this would signal a stepping stone to higher highs. The bearish side is the consistently low volume statistics being repeated session after session. That in part indicates a restless investor mood waiting for the other shoe to fall and send the markets down. All that is needed now is a Black Swan event and surprise is its middle name. Don't become complacent now and experiment with over night swings as you are sure to get burned at guessing.
Profit taking may be contributing to the early weakness on Wall Street, with some traders cashing in on the recent gains, which lifted the major averages to their highest levels in over three months.
A negative reaction to disappointing quarterly results from Lowe's may also be generating some negative sentiment. Shares of Lowe's are down by 3.2 percent after the home improvement retailer reported weaker than expected second quarter results and provided disappointing guidance.
Nonetheless, most traders seem to be staying on the sidelines amid a relatively light day on both the economic and corporate news fronts.
Most of the major sectors are showing only modest moves, although some weakness is visible among networking, housing, and software stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index crept up by 0.1 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.
The RRR** still was very narrow at the closing bell and any trades probably ended up on the unprofitable side as this market remained flat. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly.
The DOW at 4:00 is at 13271 down 3.56 or -0.03%.
The 500 is at 1418 down 0.03 or -0.00%.
The $RUT is at 816.51 down 3.88 or -0.41%.
SPY is at 142.14 down 0.04 or -0.03%.
The trend is neutral and the current bias is neutral.
WTI oil is at 95.91 trading between 96.55 and 95.40 and the bias is negative.
Gold is up today at 1621.41 trading between 1622.50 and 1609.65 with a positive bias.
Dr. Copper is at 3.38 down from 3.42 earlier.
Earlier the USD tumbled from 82.82 on Friday to 82.43 this morning and is currently at 82.50.
Market sentiment waned on Monday amid the growing rift with the euro-area, and the drop in risk-taking behavior may gather pace throughout the North American trade as the heightening threat for contagion continues to drag on investor confidence.
European markets have wound down for the day, making losses across the board. The Bundesbank had questioned the wisdom of having the ECB buy Spanish and Greek bonds to keep borrowing costs under control, saying that to do so would carry "substantial risks".
Prime Minister Benjamin Netanyahu said on Sunday that most threats to Israel's security were "dwarfed" by the prospect of Iran obtaining nuclear weaponry.
His comment fuelled the debate in Israel about whether to go to war against Iran over its nuclear programme. This worried oil investors who see it as defying appeals by US President Barack Obama to allow more time for international diplomacy.
The bad news just keeps coming for Greece. Now, it appears that the country will have to make even deeper cuts than anticipated to satisfy its international creditors. German commentators wonder when the downward spiral will come to an end. more...
A nation allergic to business A key question that remains unanswered is what Greece could produce in the coming years to enable the debt-wracked economy to return...
U.S. drivers are paying an average of $3.72/gallon today for gasoline, the highest price ever on this date and even higher than the $3.717 average on Aug. 20, 2008, AAA reports. Prices range from a low of $3.43 in South Carolina to $4.32 in Hawaii. Arizona, Mississippi and New Mexico also have average prices below $3.50; California and Illinois are above $4/gallon.
** RRR = Risk Reward Ratio
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Written by Gary